is RMD due for a 401(k) employed participant
once someone turns 70 and half yrs of age but they are still employed and participating in their employer 401(k) plan, do they have to satisfy their first RMD by April 1st of the following year?
Does RMD requirement get delayed because they are still employed?
Could they still make contributions to their 401(k) if still employed?
Permalink Submitted by Alan Spross on Mon, 2011-06-13 17:25
Per IRS Regs RMDs from qualified plans do not start until after the employee retires, unless the employee is a 5% or greater owner of the employer.
That said, a plan is allowed to require that RMDs begin by 4/1 following the year the employee reaches 70.5. There are a few such plans that have adopted those rules. A plan is allowed to be more restrictive than the IRS rules, but not more liberal.
Contributions can still be made to 401k and other qualified employer plans beyond 70.5 as long as the employee completes the minimum hours required under the plan provisions.
The traditional IRA is the only type of retirement account where contributions must cease AND RMDs must begin at 70.5.